Nutrien Reports Second Quarter 2024 Results and Announces Chief Financial Officer Transition

SASKATOON, Saskatchewan--(BUSINESS WIRE)-- Nutrien Ltd. (TSX and NYSE: NTR) announced today its second quarter 2024 results, with net earnings of $392 million ($0.78 diluted net earnings per share). Second quarter 2024 adjusted EBITDA ¹ was $2.2 billion and adjusted net earnings per share ¹ was $2.34.

“Nutrien benefited from improved Retail margins, higher fertilizer sales volumes and lower operating costs in the first-half of 2024. Crop input demand remains strong, and we raised our full-year outlook for global potash demand due to healthy engagement in all key markets,” commented Ken Seitz, Nutrien’s President and CEO.

“Our upstream production assets and downstream Retail businesses in North America and Australia have performed well in 2024. In Brazil, we continue to see challenges and are accelerating a margin improvement plan that is focused on further reducing operating costs and rationalizing our footprint to optimize cash flow,” added Mr. Seitz.

Highlights ² :

• Generated net earnings of $557 million and adjusted EBITDA of $3.3 billion in the first half of 2024. Adjusted EBITDA was down from the same period in 2023 primarily due to lower fertilizer net selling prices. This was partially offset by increased Nutrien Ag Solutions (“Retail”) earnings, higher Potash sales volumes, and lower natural gas costs.

• Retail adjusted EBITDA increased to $1.2 billion in the first half of 2024 supported by strong grower demand and a normalization of product margins in North America. Full-year 2024 Retail adjusted EBITDA guidance lowered due primarily to ongoing market instability in Brazil as well as the impact of delayed planting in North America in the second quarter.

• Potash adjusted EBITDA declined to $1.0 billion in the first half of 2024 due to lower net selling prices, which more than offset higher sales volumes and lower operating costs. Full-year 2024 Potash sales volume guidance raised due to record first half sales volumes and the expectation for strong global demand in the second half of 2024.

• Nitrogen adjusted EBITDA decreased to $1.1 billion in the first half of 2024 due to lower net selling prices, which more than offset lower natural gas costs. Ammonia production increased in the first half, driven by improved reliability and less turnaround activity.

• Accelerating a margin improvement plan in Brazil, including the curtailment of 3 fertilizer blenders and closure of 21 selling locations in the second quarter of 2024. Recognized a $335 million non-cash impairment of our Retail – Brazil assets due to ongoing market instability and more moderate margin expectations. Incurred a loss on foreign currency derivatives of approximately $220 million in Brazil. ³

• Previously announced that we are no longer pursuing our Geismar Clean Ammonia project and recognized a $195 million non-cash impairment of assets related to this project.

1. This is a non-GAAP financial measure. See the “Non-GAAP Financial Measures” section.

2. Our discussion of highlights set out on this page is a comparison of the results for the three and six months ended June 30, 2024 to the results for the three and six months ended June 30, 2023, unless otherwise noted.

3. For further information see the Corporate and Others and Eliminations, and Controls and Procedures sections of the Management’s Discussion and Analysis, and Note 6 to the unaudited Interim Condensed Consolidated Financial Statements as at and for the three and six months ended June 30, 2024.

Chief Financial Officer Transition:

Nutrien also announces the appointment of Mark Thompson as Executive Vice President and Chief Financial Officer, effective August 26, 2024. In alignment with Nutrien's succession plan, Mr. Thompson succeeds Pedro Farah, who will remain with Nutrien in an advisory capacity until his departure on December 31, 2024.

“Mark’s impressive track record of execution, along with his proven financial and strategic acumen provides the unique ability to succeed in this position on day one. He brings in-depth knowledge of our business that will support the advancement of our strategic actions to enhance quality of earnings and cash flow,” said Mr. Seitz. “On behalf of the Nutrien team, I would also like to thank Pedro for his service and commitment to Nutrien over the last five years.”

“I’ve had the privilege to serve in leadership roles across the company and firmly believe in the opportunities afforded by Nutrien’s strong competitive advantages and world-class asset base to deliver long-term shareholder value,” said Mr. Thompson. “I look forward to continuing to partner with Ken and our executive leadership team on the disciplined execution of our strategy and drive a focused approach to capital allocation.

Mr. Thompson has been with the Company since 2011, currently serving as Executive Vice President and Chief Commercial Officer. Prior to his current position he held numerous executive and senior leadership roles across the company, including Chief Strategy & Sustainability Officer, Chief Corporate Development & Strategy Officer, and Vice President of Business Development for Nutrien’s Retail business. He earned his Bachelor of Commerce (Finance) and Bachelor of Arts degrees from the University of Saskatchewan and holds the Chartered Financial Analyst (CFA) designation.

Management’s Discussion and Analysis

The following management’s discussion and analysis (“MD&A”) is the responsibility of management and is dated as of August 7, 2024. The Board of Directors (“Board”) of Nutrien carries out its responsibility for review of this disclosure principally through its Audit Committee, composed entirely of independent directors. The Audit Committee reviews and, prior to its publication, approves this disclosure pursuant to the authority delegated to it by the Board. The term “Nutrien” refers to Nutrien Ltd. and the terms “we”, “us”, “our”, “Nutrien” and “the Company” refer to Nutrien and, as applicable, Nutrien and its direct and indirect subsidiaries on a consolidated basis. Additional information relating to Nutrien (which, except as otherwise noted, is not incorporated by reference herein), including our annual report dated February 22, 2024 (“2023 Annual Report”), which includes our annual audited consolidated financial statements (“annual financial statements”) and MD&A, and our annual information form dated February 22, 2024, each for the year ended December 31, 2023, can be found on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov . No update is provided to the disclosure in our 2023 annual MD&A except for material information since the date of our annual MD&A. The Company is a foreign private issuer under the rules and regulations of the US Securities and Exchange Commission (the “SEC”).

This MD&A is based on and should be read in conjunction with the Company’s unaudited interim condensed consolidated financial statements as at and for the three and six months ended June 30, 2024 (“interim financial statements”) based on International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board and prepared in accordance with International Accounting Standard (“IAS”) 34 “Interim Financial Reporting”, unless otherwise noted. This MD&A contains certain non-GAAP financial measures and ratios and forward-looking statements, which are described in the “Non-GAAP Financial Measures” and the “Forward-Looking Statements” sections, respectively.

Market Outlook and Guidance

Agriculture and Retail Markets

• Favorable growing conditions have created an expectation for record US corn and soybean yields and pressured crop prices. Despite lower crop prices, demand for crop inputs in North America is expected to remain strong in the third quarter of 2024 as growers aim to maintain optimal plant health and yield potential. We anticipate that good affordability for potash and nitrogen will support fall application rates in 2024.

• Brazilian crop prices and prospective grower margins have improved from levels earlier this year supported by a weaker currency. Brazilian soybean area is expected to increase by one to three percent in the upcoming planting season and fertilizer demand is projected to be approximately 46 million tonnes in 2024, in line with historical record levels.

• Australian moisture conditions vary regionally but remain supportive of crop input demand as trend yields are expected.

Crop Nutrient Markets

• Global potash demand in the first half of 2024 was supported by favorable consumption trends in most markets and low channel inventories in North America and Southeast Asia. The settlement of contracts with China and India in July is expected to support demand in standard grade markets in the second half of 2024, while uptake on our summer fill program in North America has been strong. As a result, we have raised our 2024 full-year global potash shipment forecast to 69 to 72 million tonnes and expect a relatively balanced market in the second half of 2024.

• Global nitrogen markets are being supported by steady demand and continued supply challenges in key producing regions. Chinese urea export restrictions have been extended into the second half of 2024 and natural gas-related supply reductions could continue to impact nitrogen operating rates in Egypt and Trinidad. US nitrogen inventories were estimated to be below average levels entering the second half of 2024, contributing to strong engagement on our summer fill programs.

• Phosphate fertilizer prices are being supported by tight global supply due to Chinese export restrictions, low channel inventories in North America and seasonal demand in Brazil and India. We anticipate some impact on demand for phosphate fertilizer in the second half of 2024 as affordability levels have declined compared to potash and nitrogen.

Financial and Operational Guidance

• Retail adjusted EBITDA guidance was lowered to $1.5 to $1.7 billion due primarily to ongoing market instability in Brazil as well as the impact of delayed planting in North America in the second quarter.
  
  
• Potash sales volume guidance was increased to 13.2 to 13.8 million tonnes due to expectations for higher global demand in 2024. The range reflects the potential for a relatively short duration Canadian rail strike in the second half.
  
  
• Nitrogen sales volume guidance was narrowed to 10.7 to 11.1 million tonnes as we continue to expect higher operating rates at our North American and Trinidad plants and growth in sales of upgraded products such as urea and nitrogen solutions.
  
  
• Phosphate sales volume guidance was lowered to 2.5 to 2.6 million tonnes reflecting extended turnaround activity and delayed mine equipment moves.
  
  
• Finance costs guidance was lowered to $0.7 to $0.8 million due to a lower expected average short-term debt balance.

All guidance numbers, including those noted above are outlined in the table below. Refer to page 65 of Nutrien’s 2023 Annual Report for related assumptions and sensitivities.

	2024 Guidance Ranges 1 as of
	August 7, 2024						May 8, 2024
(billions of US dollars, except as otherwise noted)	Low			High			Low			High
Retail adjusted EBITDA	1.5			1.7			1.65			1.85
Potash sales volumes (million tonnes) 2	13.2			13.8			13.0			13.8
Nitrogen sales volumes (million tonnes) 2	10.7			11.1			10.6			11.2
Phosphate sales volumes (million tonnes) 2	2.5			2.6			2.6			2.8
Depreciation and amortization	2.2			2.3			2.2			2.3
Finance costs	0.7			0.8			0.75			0.85
Effective tax rate on adjusted net earnings (%) 3	23.0			25.0			23.0			25.0
Capital expenditures 4	2.2			2.3			2.2			2.3
1 See the “Forward-Looking Statements” section.
2 Manufactured product only.
3 This is a non-GAAP financial measure. See the “Non-GAAP Financial Measures” section.
4 Comprised of sustaining capital expenditures, investing capital expenditures and mine development and pre-stripping capital expenditures, which are supplementary financial measures. See the “Other Financial Measures” section.

Consolidated Results

		Three Months Ended June 30									Six Months Ended June 30
(millions of US dollars, except as otherwise noted)		2024			2023			% Change			2024			2023			% Change
Sales		10,156			11,654			(13)			15,545			17,761			(12)
Gross margin		2,912			3,166			(8)			4,449			5,079			(12)
Expenses		2,068			2,038			1			3,186			3,012			6
Net earnings		392			448			(13)			557			1,024			(46)
Adjusted EBITDA 1		2,235			2,478			(10)			3,290			3,899			(16)
Diluted net earnings per share		0.78			0.89			(12)			1.10			2.03			(46)
Adjusted net earnings per share 1		2.34			2.53			(8)			2.81			3.63			(23)
1 This is a non-GAAP financial measure. See the “Non-GAAP Financial Measures” section.

Net earnings decreased in the second quarter and first half of 2024 compared to the same periods in 2023, primarily due to lower fertilizer net selling prices and a loss on foreign currency derivatives. Adjusted EBITDA decreased over the same periods primarily due to lower fertilizer net selling prices, partially offset by increased Retail earnings, higher offshore Potash sales volumes, and lower natural gas costs.

Segment Results

Our discussion of segment results set out on the following pages is a comparison of the results for the three and six months ended June 30, 2024 to the results for the three and six months ended June 30, 2023, unless otherwise noted.

Nutrien Ag Solutions (“Retail”)

		Three Months Ended June 30									Six Months Ended June 30
(millions of US dollars, except as otherwise noted)		2024			2023			% Change			2024			2023			% Change
Sales		8,074			9,128			(12)			11,382			12,550			(9)
Cost of goods sold		6,045			7,197			(16)			8,606			10,004			(14)
Gross margin		2,029			1,931			5			2,776			2,546			9
Adjusted EBITDA 1		1,128			1,067			6			1,205			1,033			17
1 See Note 2 to the interim financial statements.

• Retail adjusted EBITDA increased in the second quarter and first half of 2024, supported by strong grower demand and a normalization of product margins in North America. We recognized a $335 million non-cash impairment of our Retail – Brazil assets in the second quarter of 2024 due to ongoing market instability and more moderate margin expectations. During the same period in 2023, we recognized a $465 million non-cash impairment primarily to goodwill relating to our Retail – South America assets.

		Three Months Ended June 30												Six Months Ended June 30
		Sales						Gross Margin						Sales						Gross Margin
(millions of US dollars)		2024			2023			2024			2023			2024			2023			2024			2023
Crop nutrients		3,281			3,986			686			629			4,590			5,321			940			770
Crop protection products		2,733			3,070			677			673			3,847			4,224			911			881
Seed		1,434			1,428			296			265			1,919			1,935			355			337
Services and other		292			308			239			254			448			456			364			372
Merchandise		245			273			42			47			445			519			73			91
Nutrien Financial		133			122			133			122			199			179			199			179
Nutrien Financial elimination 1		(44)			(59)			(44)			(59)			(66)			(84)			(66)			(84)
Total		8,074			9,128			2,029			1,931			11,382			12,550			2,776			2,546
1 Represents elimination of the interest and service fees charged by Nutrien Financial to Retail branches.

• Crop nutrients sales decreased in the second quarter and first half of 2024 due to lower selling prices. Gross margin increased over both periods due to higher per-tonne margins, including proprietary crop nutritional and biostimulant product lines. Lower second quarter sales volumes were the result of wet weather that delayed planting and impacted fertilizer applications in North America.

• Crop protection products sales were lower in the second quarter and first half of 2024 primarily due to lower selling prices across all geographies and delayed applications in North America. Gross margin for the second quarter and first half of 2024 increased from the comparable periods in 2023, which was impacted by the sell through of higher cost inventory.

• Seed sales for the second quarter and first half of 2024 were consistent with the comparable periods in the prior year while gross margin increased driven by an increase in proprietary products gross margins and the timing of supplier programs.

• Nutrien Financial sales and gross margin increased in the second quarter and first half of 2024 due to higher financing offering rates and expanded program participation from growers in the US and Australia.

Supplemental Data		Three Months Ended June 30												Six Months Ended June 30
		Gross Margin						% of Product Line 1						Gross Margin						% of Product Line 1
(millions of US dollars, except as otherwise noted)		2024			2023			2024			2023			2024			2023			2024			2023
Proprietary products
Crop nutrients		220			214			32			34			290			268			31			35
Crop protection products		227			253			34			38			310			327			34			37
Seed		127			113			44			42			144			143			41			42
Merchandise		4			3			9			7			7			6			9			7
Total		578			583			29			30			751			744			27			29
1 Represents percentage of proprietary product margins over total product line gross margin.

		Three Months Ended June 30												Six Months Ended June 30
		Sales Volumes ( tonnes - thousands)						Gross Margin / Tonne ( US dollars)						Sales Volumes ( tonnes - thousands)						Gross Margin / Tonne ( US dollars)
		2024			2023			2024			2023			2024			2023			2024			2023
Crop nutrients
North America		4,298			4,599			146			131			5,762			5,794			144			123
International		1,125			1,132			53			26			2,043			1,977			54			29
Total		5,423			5,731			127			110			7,805			7,771			120			99

(percentages)		June 30, 2024			December 31, 2023
Financial performance measures 1, 2
Cash operating coverage ratio		65			68
Adjusted average working capital to sales		19			19
Adjusted average working capital to sales excluding Nutrien Financial		-			1
Nutrien Financial adjusted net interest margin		5.3			5.2
1 Rolling four quarters.
2 These are non-GAAP financial measures. See the “Non-GAAP Financial Measures” section.

Potash

		Three Months Ended June 30									Six Months Ended June 30
(millions of US dollars, except as otherwise noted)		2024			2023			% Change			2024			2023			% Change
Net sales		756			1,009			(25)			1,569			2,011			(22)
Cost of goods sold		359			353			2			717			658			9
Gross margin		397			656			(39)			852			1,353			(37)
Adjusted EBITDA 1		472			654			(28)			1,002			1,330			(25)
1 See Note 2 to the interim financial statements.

• Potash adjusted EBITDA declined in the second quarter and first half of 2024 due to lower net selling prices, which more than offset increased sales volumes. Higher potash production and the continuation of mine automation advancements helped lower our controllable cash cost of product manufactured in the first half of 2024.

Manufactured product		Three Months Ended June 30						Six Months Ended June 30
($ / tonne, except as otherwise noted)		2024			2023			2024			2023
Sales volumes (tonnes - thousands)
North America		914			1,226			2,221			2,080
Offshore		2,649			2,156			4,755			3,938
Total sales volumes		3,563			3,382			6,976			6,018
Net selling price
North America		301			383			306			391
Offshore		182			250			187			304
Average net selling price		212			298			225			334
Cost of goods sold		101			104			103			109
Gross margin		111			194			122			225
Depreciation and amortization		42			34			43			35
Gross margin excluding depreciation and amortization 1		153			228			165			260
1 This is a non-GAAP financial measure. See the “Non-GAAP Financial Measures” section.

• Sales volumes increased in the second quarter of 2024 due to higher offshore demand, partially offset by lower sales volumes in North America resulting from more normal seasonal purchasing compared to the same period in 2023. Strong demand in major offshore markets and low channel inventories in North America at the beginning of 2024 supported record first half sales volumes.

• Net selling price per tonne decreased in the second quarter and first half of 2024 due to a decline in benchmark prices compared to the same periods last year.

• Cost of goods sold per tonne decreased in the second quarter and first half of 2024 mainly due to higher production volumes and lower royalties.

Supplemental Data		Three Months Ended June 30						Six Months Ended June 30
		2024			2023			2024			2023
Production volumes (tonnes – thousands)		3,575			3,237			7,140			6,325
Potash controllable cash cost of product manufactured per tonne 1		50			60			53			61
Canpotex sales by market (percentage of sales volumes)
Latin America		44			55			38			46
Other Asian markets 2		27			19			30			28
China		7			6			13			8
India		8			10			6			6
Other markets		14			10			13			12
Total		100			100			100			100
1 This is a non-GAAP financial measure. See the “Non-GAAP Financial Measures” section.
2 All Asian markets except China and India.

Nitrogen

		Three Months Ended June 30									Six Months Ended June 30
(millions of US dollars, except as otherwise noted)		2024			2023			% Change			2024			2023			% Change
Net sales		1,028			1,216			(15)			1,939			2,528			(23)
Cost of goods sold		650			817			(20)			1,254			1,588			(21)
Gross margin		378			399			(5)			685			940			(27)
Adjusted EBITDA 1		594			569			4			1,058			1,245			(15)
1 See Note 2 to the interim financial statements.

• Nitrogen adjusted EBITDA increased in the second quarter of 2024 due to lower natural gas costs and insurance recoveries included in other income and expense items, which more than offset lower net selling prices and sales volumes. First half adjusted EBITDA decreased as lower net selling prices more than offset lower natural gas costs. We announced we are no longer pursuing our Geismar Clean Ammonia project and recognized a $195 million non-cash impairment of assets during the second quarter. Our ammonia operating rate increased in the second quarter and first half of 2024 primarily due to improved reliability and less turnaround activity.

Manufactured product		Three Months Ended June 30						Six Months Ended June 30
($ / tonne, except as otherwise noted)		2024			2023			2024			2023
Sales volumes (tonnes - thousands)
Ammonia		698			681			1,215			1,215
Urea and ESN ®		864			952			1,639			1,699
Solutions, nitrates and sulfates		1,256			1,312			2,471			2,388
Total sales volumes		2,818			2,945			5,325			5,302
Net selling price
Ammonia		405			488			404			591
Urea and ESN ®		445			472			438			536
Solutions, nitrates and sulfates		238			254			232			279
Average net selling price		343			379			335			433
Cost of goods sold		211			237			209			254
Gross margin		132			142			126			179
Depreciation and amortization		54			55			54			56
Gross margin excluding depreciation and amortization 1		186			197			180			235
1 This is a non-GAAP financial measure. See the “Non-GAAP Financial Measures” section.

• Sales volumes were lower in the second quarter of 2024 as wet weather in North America impacted the timing of nitrogen applications. First half sales volumes were flat compared to the same period in 2023.

• Net selling price per tonne was lower in the second quarter and first half of 2024 for all major nitrogen products primarily due to weaker benchmark prices in key nitrogen producing regions.

• Cost of goods sold per tonne decreased in the second quarter and first half of 2024 mainly due to lower natural gas costs.

Supplemental Data		Three Months Ended June 30						Six Months Ended June 30
		2024			2023			2024			2023
Sales volumes (tonnes – thousands)
Fertilizer		1,716			1,866			3,139			3,114
Industrial and feed		1,102			1,079			2,186			2,188
Production volumes (tonnes – thousands)
Ammonia production – total 1		1,383			1,249			2,835			2,680
Ammonia production – adjusted 1, 2		999			931			2,017			1,968
Ammonia operating rate (%) 2		89			85			91			90
Natural gas costs (US dollars per MMBtu)
Overall natural gas cost excluding realized derivative impact		2.65			2.76			2.91			3.85
Realized derivative impact 3		0.10			(0.02)			0.07			(0.01)
Overall natural gas cost		2.75			2.74			2.98			3.84
1 All figures are provided on a gross production basis in thousands of product tonnes.
2 Excludes Trinidad and Joffre.
3 Includes realized derivative impacts recorded as part of cost of goods sold or other income and expenses. Refer to Note 4 to the interim financial statements.

Phosphate

		Three Months Ended June 30									Six Months Ended June 30
(millions of US dollars, except as otherwise noted)		2024			2023			% Change			2024			2023			% Change
Net sales		394			502			(22)			831			1,016			(18)
Cost of goods sold		361			453			(20)			733			880			(17)
Gross margin		33			49			(33)			98			136			(28)
Adjusted EBITDA 1		88			113			(22)			209			250			(16)
1 See Note 2 to the interim financial statements.

• Phosphate adjusted EBITDA decreased in the second quarter and first half of 2024 primarily due to lower net selling prices, partially offset by lower input costs. During last year’s second quarter, we recognized a $233 million non-cash impairment of our White Springs property, plant and equipment.

Manufactured product		Three Months Ended June 30						Six Months Ended June 30
($ / tonne, except as otherwise noted)		2024			2023			2024			2023
Sales volumes (tonnes - thousands)
Fertilizer		415			426			862			814
Industrial and feed		169			160			342			320
Total sales volumes		584			586			1,204			1,134
Net selling price
Fertilizer		601			595			614			636
Industrial and feed		830			1,100			839			1,118
Average net selling price		667			732			678			772
Cost of goods sold		602			643			590			647
Gross margin		65			89			88			125
Depreciation and amortization		116			121			115			122
Gross margin excluding depreciation and amortization 1		181			210			203			247
1 This is a non-GAAP financial measure. See the “Non-GAAP Financial Measures” section.

• Sales volumes were flat in the second quarter of 2024 compared to the same period last year as lower fertilizer volumes were offset by higher feed volumes. First half sales volumes were higher than the first half of 2023 due to strong fertilizer, industrial and feed demand.

• Net selling price per tonne decreased in the second quarter and first half of 2024 due primarily to lower industrial and feed net selling prices which reflect the typical lag in price realizations relative to benchmark prices.

• Cost of goods sold per tonne decreased in the second quarter and first half of 2024 mainly due to lower ammonia and sulfur input costs.

Supplemental Data		Three Months Ended June 30						Six Months Ended June 30
		2024			2023			2024			2023
Production volumes (P 2 O 5 tonnes – thousands)		326			331			678			672
P 2 O 5 operating rate (%)		77			78			80			80

Corporate and Others and Eliminations

		Three Months Ended June 30									Six Months Ended June 30
(millions of US dollars, except as otherwise noted)		2024			2023			% Change			2024			2023			% Change
Corporate and Others
Selling expenses (recovery)		(3)			(2)			50			(5)			(4)			25
General and administrative expenses		98			88			11			187			172			9
Share-based compensation expense (recovery)		10			(64)			n/m			16			(49)			n/m
Foreign exchange loss, net of related derivatives		285			52			448			328			18			n/m
Other expenses		26			99			(74)			80			52			54
Adjusted EBITDA 1		(121)			(60)			102			(222)			(73)			204
Eliminations
Gross margin		75			131			(43)			38			104			(63)
Adjusted EBITDA 1		74			135			(45)			38			114			(67)
1 See Note 2 to the interim financial statements.

• Share-based compensation was an expense in the second quarter and first half of 2024 and a recovery in the comparable prior periods in 2023 due to an increase in fair value of our share-based awards in 2024. The fair value takes into consideration several factors such as our share price movement, our performance relative to our peer group and return on our invested capital.

• Foreign exchange loss, net of related derivatives was higher mainly due to a loss on foreign currency derivatives in Brazil of approximately $220 million in the second quarter of 2024. This was primarily the result of the execution of certain derivative contracts with financial institutions in Brazil in June 2024, which were made by an individual outside applicable internal policy and authority limits. At the end of July 2024, foreign currency derivative contracts related to this event were settled. For further detail regarding the impact of the loss and our remediation efforts, see the Controls and Procedures section of this MD&A and Note 6 to the interim financial statements.

• Other expenses were lower in the second quarter of 2024 compared to the same period in 2023 mainly due to lower losses related to financial instruments in Argentina. Other expenses were higher in the first half of 2024 compared to the same period in 2023, as we recognized an $80 million gain in 2023 from our post-retirement benefit plan amendments, resulting in lower expense in the first half of 2023.

Eliminations

• Eliminations are not part of the Corporate and Others segment. The recovery of gross margin between operating segments decreased for the second quarter and first half of 2024 due to lower margins on sales between our operating segments compared to the comparable periods in 2023.

Finance Costs, Income Taxes and Other Comprehensive Income (Loss)

		Three Months Ended June 30									Six Months Ended June 30
(millions of US dollars, except as otherwise noted)		2024			2023			% Change			2024			2023			% Change
Finance costs		162			204			(21)			341			374			(9)
Income tax expense		290			476			(39)			365			669			(45)
Actual effective tax rate including discrete items (%)		43			51			(16)			40			40			‐
Other comprehensive income (loss)		44			68			(35)			(58)			70			n/m

• Finance costs were lower in the second quarter and first half of 2024 primarily due to lower short term debt average balances partially offset by higher interest rates.

• Income tax expense was lower in the second quarter and first half of 2024 primarily as a result of lower earnings compared to the same periods in 2023. In addition, discrete tax adjustments primarily related to the change in recognition of deferred tax assets in our Retail – South America region and results of tax authority examinations increased our 2023 income tax expense.

• Other comprehensive income (loss) was primarily driven by lower income in the second quarter and first half of 2024 compared to the comparable periods in 2023 mainly due to depreciation of Brazilian and Canadian currencies relative to the US dollar.
  
  

Liquidity and Capital Resources

Sources and Uses of Liquidity

We continued to manage our capital in accordance with our capital allocation strategy. We believe that our internally generated cash flow, supplemented by available borrowings under new or existing financing sources, if necessary, will be sufficient to meet our anticipated capital expenditures, planned growth and development activities, and other cash requirements for the foreseeable future. Refer to the “Capital Structure and Management” section for details on our existing long-term debt and credit facilities.

Sources and Uses of Cash

		Three Months Ended June 30									Six Months Ended June 30
(millions of US dollars, except as otherwise noted)		2024			2023			% Change			2024			2023			% Change
Cash provided by operating activities		1,807			2,243			(19)			1,320			1,385			(5)
Cash used in investing activities		(614)			(858)			(28)			(1,108)			(1,552)			(29)
Cash (used in) provided by financing activities		(684)			(2,124)			(68)			(136)			5			n/m
Cash used for dividends and share repurchases 1		(266)			(413)			(36)			(527)			(1,556)			(66)
1 This is a supplementary financial measure. See the “Other Financial Measures” section.

Cash provided by operating activities		Cash provided by operating activities in the second quarter and first half of 2024 was lower compared to the same periods in 2023 primarily due to lower realized selling prices across all segments.
Cash used in investing activities		Cash used in investing activities was lower in the second quarter and first half of 2024 compared to the same periods in 2023 due to lower capital expenditures and fewer business acquisitions.
Cash (used in) provided by financing activities		Cash used in financing activities in the second quarter of 2024 was lower compared to the same period in 2023 due to the issuance of $1,000 million of senior notes in the second quarter of 2024. Cash used in financing activities for the first half of 2024 was for payments of dividends, debt and lease liabilities, which more than offset the amount received from the debt issuance. For the same period in 2023, cash received from the debt issuance mostly offset the total amount paid for dividends, share repurchases, debt and lease liabilities.
Cash used for dividends and share repurchases		Cash used for dividends and share repurchases was lower in the second quarter and first half of 2024 compared to the same periods in 2023 as we did not repurchase any shares in the second quarter and first half of 2024, compared to $150 million and $1,047 million of share repurchases in the same periods in 2023.

Financial Condition Review

The following is a comparison of balance sheet categories that are considered material:

		As at
(millions of US dollars, except as otherwise noted)		June 30, 2024			December 31, 2023			$ Change			% Change
Assets
Cash and cash equivalents		1,004			941			63			7
Receivables		8,123			5,398			2,725			50
Inventories		5,298			6,336			(1,038)			(16)
Prepaid expenses and other current assets		663			1,495			(832)			(56)
Property, plant and equipment		22,198			22,461			(263)			(1)
Intangible assets		1,912			2,217			(305)			(14)
Liabilities and Equity
Short-term debt		1,571			1,815			(244)			(13)
Current portion of long-term debt		1,012			512			500			98
Payables and accrued charges		9,024			9,467			(443)			(5)
Long-term debt		9,399			8,913			486			5
Retained earnings		11,542			11,531			11			‐

• Explanations for changes in Cash and cash equivalents are in the “Sources and Uses of Cash” section.

• Receivables increased primarily due to the seasonality of Retail sales.

• Inventories decreased due to seasonal Retail sales as inventory drawdowns occur. Generally, we build up our inventory levels in North America at year end in preparation for the following year's planting and application seasons.

• Prepaid expenses and other current assets decreased due to the seasonal drawdown of prepaid inventories during the spring planting and application seasons in North America.

• Property, plant and equipment decreased due to the impairments related to our Retail – Brazil assets and Geismar Clean Ammonia project.

• Intangible assets decreased due to an impairment of our Retail – Brazil assets.

• Short-term debt decreased due to repayments on our credit facilities based on our working capital requirements driven by the seasonality of our business.

• Payables and accrued charges decreased from lower customer prepayments in North America as Retail customers took delivery of prepaid sales.

• Long-term debt including current portion increased due to the issuance of $1,000 million of notes in the second quarter of 2024.

• Retained earnings increased as net earnings in the first half of 2024 exceeded dividends declared and share repurchases.
  
  

Capital Structure and Management

Principal Debt Instruments

As part of the normal course of business, we closely monitor our liquidity position. We use a combination of cash generated from operations and short-term and long-term debt to finance our operations. We continually evaluate various financing arrangements and may seek to engage in transactions from time to time when market and other conditions are favorable. We were in compliance with our debt covenants and did not have any changes to our credit ratings for the six months ended June 30, 2024.

Capital Structure (Debt and Equity)

(millions of US dollars)		June 30, 2024			December 31, 2023
Short-term debt		1,571			1,815
Current portion of long-term debt		1,012			512
Current portion of lease liabilities		364			327
Long-term debt		9,399			8,913
Lease liabilities		1,024			999
Shareholders' equity		25,159			25,201

Commercial Paper, Credit Facilities and Other Debt

We have a total facility limit of approximately $8,900 million comprised of several credit facilities available in the jurisdictions where we operate. In North America, we have a commercial paper program, which is limited to the undrawn amount under our $4,500 million unsecured revolving term credit facility and excess cash invested in highly liquid securities.

As at June 30, 2024, we have utilized $1,529 million of our total facility limit, which includes $1,096 million of commercial paper outstanding.

As at June 30, 2024, $242 million in letters of credit were outstanding and committed, with $187 million of remaining credit available under our letter of credit facilities.

Our long-term debt consists primarily of notes and debentures. See the “Capital Structure and Management” section of our 2023 Annual Report for information on balances, rates and maturities for our notes and debentures. On June 21, 2024, we issued $400 million of 5.2 percent senior notes due June 21, 2027 and $600 million of 5.4 percent senior notes due June 21, 2034.

See Notes 7 and 8 to the interim financial statements for additional information.

In March 2024, we filed a base shelf prospectus in Canada and the US qualifying the issuance of common shares, debt securities, and other securities during a period of 25 months from March 22, 2024.

Outstanding Share Data

		As at August 2, 2024
Common shares		494,757,156
Options to purchase common shares		3,478,893

For more information on our capital structure and management, see Note 24 to the annual financial statements in our 2023 Annual Report.

Quarterly Results

(millions of US dollars, except as otherwise noted)

Q2 2024

Q1 2024

Q4 2023

Q3 2023

Q2 2023

Q1 2023

Q4 2022

Q3 2022

Sales

10,156

</